In the RITE AID CORPORATION, DIP case, the Debtors disclosed that as part of the Elixir sale financing, it received term loans equal to $567.4 million, and cash in an aggregate amount equal to $43.1 million. An additional $14.4 million will be held in escrow, subject to certain post-closing purchase price adjustments in accordance with customary working capital calculations. The proceeds of the Elixir sale transaction will be used in the process of evaluating potential recoveries to the Company’s stakeholders in connection with the Chapter 11 process and the proposed Plan of Reorganization; the Company collaterally assigned all of its rights arising under the term loans to the senior secured DIP lenders, as collateral security.

The Debtors notified the Court they are closing three additional stores. To date, the Debtors have notified the Court of 407 store closures.

Ahold Delhaize sold two meat-processing plants to Cargill, though terms of the transaction were not disclosed. The Company will continue to source packaged meat products from the facilities, located in North Kingstown, RI and Camp Hill, PA. In addition, Cargill stated it would provide case-ready meat products to other retailers from the facilities. 

Meanwhile, Ahold Delhaize struck a deal with DoorDash under which it will provide grocery delivery services from all five of its U.S. banners. DoorDash has already started offering the service for Giant Food, Hannaford, The Giant Company, and Stop & Shop, and plans to add Food Lion in March. 

Primark announced the opening of a new distribution center in Jacksonville, FL. The 550,000 square-foot DC will serve Primark's expansion in the U.S. with a focus on Southern states including Florida and Texas. In addition, the Company also signed leases at Potomac Mills, Woodbridge, VA; Mall at Prince George's, Hyattsville, MD; CoolSprings Galleria, Franklin, TN, and Katy Mills, Katy, TX. These stores will be serviced by the Jacksonville DC and Primark's existing DC in Bethlehem, PA. Primark currently operates 24 stores in the U.S. across nine states and has plans to reach 60 stores in the U.S. by 2026. 

Following our recent reporting that Big Lots is seeking new financing to address ongoing operating losses and strained liquidity, on February 12 Bruce Thorn, Big Lots President and CEO commented, “I am pleased to share that we delivered fourth quarter performance in line with our guidance on comparable sales, gross margin rate, operating expenses, and inventory. In addition, we generated substantial cash flow in the quarter, which was used to pay down debt on our $900 million asset-based lending facility. We look forward to reviewing full fourth quarter results in more detail in our upcoming earnings call on March 7."

Amazon is cutting hundreds of jobs across One Medical and Amazon Pharmacy to "realign" resources. The Company did not disclose the number of employees or what roles are being impacted by the cuts. The Company indicated that it is not in a hiring freeze and it will continue to hire providers and employees for One Medical and Amazon Pharmacy. Amazon closed its acquisition of One Medical in February 2023 for $3.90 billion and announced discounted One Medical memberships for Prime users in November. This is the latest round of job cuts at Amazon. Early last year it had cut more than 27,000 roles, and later in the year Amazon Pharmacy let go 80 employees, and a number of healthcare roles were dissolved when Amazon's hybrid care offering Amazon Care shut down. 

Central Garden & Pet's pet segment sales decreased 2% due to lower revenue from durable pet products. Garden segment sales increased 6%, driven by early season shipments in Controls & Fertilizer, Grass, and Packet Seeds. 

Natural Grocers reported 1Q24 sales increased 7.6% to $301.8 million, driven by a 6.2% increase in daily average comparable sales, which included a 3.4% rise in transaction count. The Company opened two new stores and relocated one existing store during the quarter, ending with 167 stores in 21 states. The Company expects to open four to six new stores during FY24 and remodel a similar number of existing locations. Comps are expected to grow between 3% and 5%. 

Saks Fifth Avenue announced a partnership with electric vehicle company Lucid, which includes digital content on Saks' online platforms as well as in-store demo drives. Through the partnership, Saks plans to provide customers with "new, unique offerings outside of our traditional assortment," stating, "we're excited for them to experience this innovative offering online and in our stores for the first time." The move suggests the Company is looking to grow product offerings in categories where consumers demand physical engagement before buying, such as cars. 

Saks relocated its Beverly Hills store into a former 130,000 square foot Barneys location. The new location has 15 personal styling suites, six levels of shopping and separate brand boutiques. Reports indicate the Company invested $52 million overhauling the location.

Vision One Management Partners, a fund co-founded by Canadian Prime Minister Stephen Harper and former Carl Icahn protege Courtney Mather, has built an undisclosed stake in Kohl's and expressed concerns about the Company's future. Vision One has asked Kohl's to launch a sale process and give it board representation. Kohl's is the second U.S. department store operator to come under investor pressure, following last month's offer to take Macy's private by investors Arkhouse Management and Brigade Capital Management. In recent years, other shareholders have also pushed Kohl's to explore a sale. Kohl's previously rejected an offer for $64 per share in 2022, as it was lower than its $70 target price.

Skechers announced that the Delaware Chancery Court dismissed with prejudice the July 21, 2022 shareholder derivative lawsuit against all current and former members of the Company's board named as defendants in that action. 

Simon Property Group has reduced its stake in brand management firm Authentic Brands Group, from just under 12% to just under 10%, for $300 million in cash. The news comes a few months after Simon said it had reduced its stake in Sparc, co-owned by Simon and Authentic, which licenses such brands as Forever 21 and Brooks Brothers. 

After months of slow trade payments and growing speculation on the Company's future, in November 2023, Backcountry announced the sale of its European subsidiary Bergrfreunde to Decathalon, a global sporting goods retailer based in France. Our analysts had a conversation with management discussing the transaction and the Company’s pro forma financial health.

The amount of the proceeds from the sale were not disclosed; however, management said it used the proceeds to repay all its revolver debt ($118 million at the end of November 2023), while also reducing its past due accounts payable, which had caused concern throughout 2023. However, management did note that it is working through some “system issues,” which continue to delay some payments. Our ARMS Payment Score for December was 739, when 79% of payments were within terms, while partial data for January shows 90% within terms.

Post-transaction, the balance sheet was improved. On a pro forma basis, as of the end of November 2023, the Company had total assets of approximately $500 million, including cash of $17 million and inventory of $145 million. Pro forma total liabilities were approximately $214 million, including $80 million in accounts payable and $39 million in debt, primarily related to loans with equity sponsor TSG​, which acquired the Company in 2015​​​​​.​ The paydown of all revolver borrowings is expected to save about $12 million in annual interest expense.

Following the Bergrefreunde transaction, the Company entered into a new $100 million ABL facility with JP Morgan Chase; there are no amounts outstanding, but the ABL is subject to a $25 million availability block, which may be reduced over time, depending on operating results.

Reports indicate that Equinox Holdings has extended its revolver again, this time by just three weeks, now maturing February 29, 2024. This is the third revolver extension within the last year as the Company attempts to refinance the bulk of its debt. As we have previously reported, the existing capital structure, which remains highly leveraged, includes the revolver now due February 29 ($66 million outstanding), a first lien term loan ($1.02 billion outstanding) and second lien term loan ($200 million outstanding) both due March 2024.

After performance remained sluggish throughout 2021 and 2022, the Company has reportedly seen a recent surge, with 3Q23 revenue up 28%. Two new stores are also in the pipeline. RetailStat sources have indicated that Equinox owners (HPS and Ares) are among investors willing to provide funding as the Company continues to explore refinancing options, which may include some type of debt restructuring.

We have received reports of slow payments by Bob’s Stores and also a lack of responsiveness by management to related inquiries. The APS has been down in each of the last six months on a YOY basis, with a significant drop in December 2023 to 550 (moderate to high risk of late payment) from 756, at a time when only 48% of payments were within terms.

Recent payment metrics at EMS were only slightly better than Bob’s. The APS was 643 for EMS in December 2023, at a time when only 55% of payments were within terms.

Shein announced it will open a Seattle-area office that will serve as a hub for the Company’s U.S. fulfillment and logistics. “The U.S. is an important market for Shein, and we are thrilled to establish a presence in the Seattle area as we continue enhancing our fulfillment process and improving the customer experience,” Andy Huang, Shein’s head of U.S. fulfillment and logistics, said in a statement. “This expansion underscores our commitment to efficiency across our operations, and we look forward to contributing to the local community and fostering innovation in the heart of the Pacific Northwest."

Over 50 people will work from the new space by the end of the year. The company currently has a team of over 1,500 corporate and warehouse employees across the U.S.

Cineplex announced a proposal for a comprehensive refinancing plan that will include the private placement of C$550 million in new Senior Secured Notes with a maturity of at least five years. Proceeds from this issuance, along with proceeds from the recently completed sale of the Player One Amusement Group (P1AG) business for C$155 million, will be used to fully repay the Company's existing C$541.2 million revolving credit facility (C$301 million outstanding as of the end of 3Q23) maturing in November 2024 as well as all outstanding second lien secured notes due 2026 (C$246.7 million), and fund the redemption of $100 million in convertible debentures. The Company also plans to amend the convertible debenture indenture to extend the maturity from September 30, 2025 to March 1, 2030 (redeemable after March 1, 2027), at the cost of increasing the interest rate from 5.75% to 7.75%, effective April 1, 2024. The Company has the support of holders of 61.2% of the outstanding convertible debentures for this amendment, but it needs 66.7% approval to effectuate the amendment. The revolving credit facility will be replaced with a new C$100 million credit facility with a term of at least three years.

In other news, Cineplex reported YOY growth of 26% in FY23, with box office growth of 30% outpacing the North American box office relative to 2022 by nearly 800 bps. Theatre attendance rose nearly 26% as a result of the success of highly anticipated films released during the year including Barbie, The Super Mario Bros. Movie, and Oppenheimer. 

As we previously reported in May 2023, Tempur Sealy International signed a definitive agreement to acquire Mattress Firm in a cash and stock transaction valued at $4 billion. Commenting on the progress of the transaction, Tempur Sealy's CEO Scott Thompson said, "We certified compliance with the FTC's second request in 4Q23 and expect the transaction to close in 2H24. Both Tempur Sealy and Mattress Firm continue to make joint progress in integration planning, including the signing of post-closing supply agreements with numerous companies providing Mattress Firm product. These agreements provide access post-closing to certain consumer-desired products, solidifying important supplier relationships. Additional discussions regarding post-closing supplier relationships are ongoing. Overall, we are optimistic about Tempur Sealy's future and look forward to welcoming Mattress Firm into the organization later this year."

CVS Health trimmed its FY24 earnings outlook due to the impact from rising Medicare Advantage insurance costs on its Aetna business. Rivals Humana and UnitedHealthcare, the two largest Medicare Advantage insurers, have pointed to similar problems as that business faces rising costs and regulatory changes. CVS said that it believes that Medicare Advantage rates proposed for 2025 aren’t adequate, and that it will push for a higher final result. Commenting on its new CostVantage pharmacy payment model, CVS said it has begun discussions with pharmacy-benefit managers and has received positive feedback so far. CVS also said it continues to expand its new healthcare business and expects to add 50 to 60 clinics in 2024. CVS last year acquired Oak Street for $10.6 billion in cash adding a large network of doctor-staffed clinics primarily used by seniors. At quarter end, Oak Street had 204 centers, an increase of 35 centers in 2023.

In other news, CVS Health said it is selling its 22 pharmacies in Puerto Rico, in a transaction to be completed in April. According to CVS, the buyer, Caribe Pharmacy Holdings, which owns Farmacias Caridad, plans to continue all operations and retain all employees. Financial details were not disclosed. The Company said its decision to leave the U.S. territory "was based on multiple factors, including local market dynamics and population shifts." CVS said its sole specialty pharmacy location would continue to operate in Puerto Rico and that another is under construction.

Walgreens announced that it has sold shares of Cencora, Inc. for proceeds of approximately $992 million, including a concurrent share repurchase by Cencora in the amount of approximately $50 million. Walgreen's ownership of Cencora’s common stock has decreased from approximately 15% to approximately 13%. During FY23 and 1Q24, the Company sold shares of Cencora common stock for total consideration of $3.40 billion and $674 million, respectively. Proceeds to Walgreens Boots Alliance will be used primarily for debt paydown and general corporate purposes, as the Company "continues to build out a more capital-efficient health services strategy rooted in its retail pharmacy footprint." The sale has no impact on the long-term partnership between the two companies. Walgreens Boots Alliance remains fully committed to the strategic relationship with Cencora. Chief Operating Officer, International of Walgreens Boots Alliance, Ornella Barra, will continue to serve on Cencora’s Board of Directors.

In other news, Walgreens announced another round of executive changes, as the Company attempts to jump-start its new U.S. Healthcare business rooted in its retail pharmacy footprint and led by Tim Wentworth, who assumed leadership as CEO in October 2023. Mary Langowski has been appointed EVP and president, U.S. Healthcare. Langowski joins WBA after serving as CEO of Solera Health, a leading value-based technology business serving payers and employers, since 2020. Current EVP and president, U.S. Healthcare, John Driscoll, will transition to a senior advisory role working with CEO Tim Wentworth, Langowski and the U.S. Healthcare business. Manmohan Mahajan has been appointed EVP and global CFO. He has served as interim global CFO since July 2023. Mahajan joined the company in 2016 and previously served as SVP, global controller and chief accounting officer. Elizabeth Burger has been appointed EVP and chief human resources officer (CHRO). Prior to joining WBA, Burger served as SVP, CHRO at Flowserve, a provider of flow control products and services for the global infrastructure markets.

We previously reported that Red Lobster had hired AlixPartners as financial advisor to assist the Company in its turnaround efforts. Retailstat sources have indicated that the Company has replaced AlixPartners with Alvarez & Marsal.

Red Lobster’s operating woes have worsened with its 3Q23 operating loss reaching THB 395 million (about $11 million), and THB 368 million ($10 million) during the year-to-date period. The Company’s decision to make its “Ultimate Endless Shrimp” promotion a permanent menu item in June 2023 to drive traffic ultimately backfired as it was initially priced too low, significantly impacting margins. For the full year, management expected the Company’s operating loss would be about THB 700 million ($20 million). The poor operating performance put Red Lobster at risk of violating financial covenants, and minority owner Thai Union Group provided the Company with a $2.8 million term loan in October 2023 to alleviate the issue. Subsequently, in January 2024, Thai Union Group announced that it would seek to exit its investment in Red Lobster, citing sustained industry headwinds, high interest rates, and increasing labor costs. Thai Union Group recorded a one-time THB 18.5 billion ($530 million) impairment charge during 4Q23. Given these developments and a bleak outlook for 2024, if a buyer is not found, it appears increasingly likely that Red Lobster may face a formal restructuring.

On February 7, 2024, Potbelly entered into a new credit agreement with Wintrust Bank, N.A. as administrative agent. The agreement provides for a secured $30 million revolving credit facility that expires on February 7, 2027. At the same time, the Company repaid in full and terminated its previous senior secured credit facility, though management did not specify whether the previous facility was paid with new borrowings, cash on hand, or a combination thereof. As of the end of 3Q23 on September 24, 2023, the previous facility had $24.1 million in outstanding borrowings and $30.9 million in cash on hand. 

YUM! Brands reported 4Q23 sales grew 5%, with 6% unit growth and 1% sale-store sales growth. By banner, sales were up 7% at KFC, 6% at Taco Bell, and 1% at Pizza Hut. The Company opened 1,853 units during the quarter. FY23 sales grew 10%, with 6% unit and comp growth. By brand, sales rose 12% at KFC, 9% at Taco Bell, and 5% at Pizza Hut. 

General Interest